Correlation Between Ensign Energy and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Ensign Energy and Kelt Exploration at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ensign Energy and Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ensign Energy Services and Kelt Exploration, you can compare the effects of market volatilities on Ensign Energy and Kelt Exploration and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ensign Energy with a short position of Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign Energy and Kelt Exploration.
Diversification Opportunities for Ensign Energy and Kelt Exploration
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ensign and Kelt is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration and Ensign Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ensign Energy Services are associated (or correlated) with Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Ensign Energy i.e., Ensign Energy and Kelt Exploration go up and down completely randomly.
Pair Corralation between Ensign Energy and Kelt Exploration
Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 1.01 times more return on investment than Kelt Exploration. However, Ensign Energy is 1.01 times more volatile than Kelt Exploration. It trades about 0.24 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.09 per unit of risk. If you would invest 275.00 in Ensign Energy Services on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Ensign Energy Services or generate 11.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ensign Energy Services vs. Kelt Exploration
Performance |
| Timeline |
| Ensign Energy Services |
| Kelt Exploration |
Ensign Energy and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign Energy and Kelt Exploration
The main advantage of trading using opposite Ensign Energy and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign Energy position performs unexpectedly, Kelt Exploration can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.The idea behind Ensign Energy Services and Kelt Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kelt Exploration vs. Yangarra Resources | Kelt Exploration vs. iShares Canadian HYBrid | Kelt Exploration vs. Altagas Cum Red | Kelt Exploration vs. European Residential Real |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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